At Long Last Car Sales Rise But Growth Illusory


Snapping a nine-month streak of decline, domestic passenger car sales grew by 15.4% to 133,486 units in August this year, compared to 115,705 units in the same month last year. However, the numbers conceal more than what they reveal. The growth came about mainly as a result of low base of Maruti Suzuki India (MSI) in August last year, when the company’s Manesar plant was plagued by labour troubles leading to a month-long lockout.

Tough macroeconomic environment, coupled with high interest rates and volatile fuel prices, resulting in low buyer sentiment, continued to drag the sales of passenger vehicles, commercial vehicles and two-wheelers.

While, thanks to the base effect, car sales turned positive after 9 months, domestic sales of  UVs and vans did not have much to rave about, falling y-o-y by 12.6% and 18.7%, respectively in August 2013. The total domestic sales volume of passenger vehicles, comprising passenger cars, utility vehicles and vans, grew by 4.5% for a change.

Riding on good monsoon and healthy rural demand, total two-wheeler sales in domestic market during August 2013 grew by 6.7% y-oy to 1,128,598 units from 1,057,925 units in the same month of previous year. Scooter sales during the month stood at 283,142 units as against 233,180 units last year, up 21.4%, while motorcycles returned to the positive territory with modest growth of 3.8% to 795,378 units in August 2013.

Reflecting the continuing slowdown in economy, beleaguered commercial vehicle segment remained in the rut. Total sales of commercial vehicles in domestic market declined by 23.1% to 51,334 units from 66,767 units a year ago. The medium and heavy commercial vehicles (M&HCV), hit badly by the sluggish economic activity, witnessed a decline for the 18th consecutive month. The segment’s sales in domestic market dived by 38.2% y-o-y to 15,468 units during August 2013.

Three-Wheelers were also in negative terrain, their domestic sales sliding by 6.3% y-o-y to 42,527 units in August 2013.

Total domestic sales of vehicles across categories registered 4.5%  increase to 1,412,512 units in August 2013 from 1,352,025 units in the same month of 2012.

Benefiting from low base, the car market leader Maruti Suzuki India (MSI) posted a robust 51.6% rise in its domestic sales to 76,018 units in August 2013 from 50,129 units in August last year. Sales of mini segment cars, including M800, Alto, A-Star and WagonR, increased by 45.1% to 32,019 units, while that of compact segment comprising Swift, Estilo, Ritz surged 187.3% y-o-y to 17,409 units. The domestic sales of company’s  popular compact sedan DZire zoomed 344.8% during August 2013 to 13,723 units from 3,085 units in August 2012. The company’s exports were also on high growth trajectory, soaring by 180.9% y-o-y  to 11,305 units during the month..

The second largest carmaker in Indian market and the largest exporter of cars, Hyundai Motor India Ltd (HMIL) recorded a marginal increase in domestic sales in August 2013 at 28,281 units as against 28,192 units in August last year. With exports accounting for 24,008 units and growing by a healthy 28.9% y-o-y, total sales tally of HMIL stood at 52,319 units, rising by 11.6% in August 2013.

Rakesh Srivastava, Sr Vice President, Sales and Marketing, HMIL said, “The exports have shown decent growth on account of strong demand from non-European markets, while the domestic market continues to witness pressure. The overall market is suppressed due to various macro-economic factors. The frequent and steep increase in fue prices continue to impact the already low market sentiments. We expect the challenge to continue in the coming months.” 

Honda Cars India Ltd (HCIL) clocked 8,913 units of domestic sales in August 2013, posting a growth of 63% over 5,470 units sold in August 2012. 

The company also exported a total volume of 556 units. Surging ahead on Honda Amaze’s recent milestone of fastest 30,000 sales in the history of its operations in India, HCIL has registered an overall growth of 64.6% y-o-y, selling 49,263 units in the Indian market during April - August 2013.

Model wise domestic sales break-up of HCIL for August 2013 stood as: Brio – 1,508 units; Amaze – 6,242 units; City - 953 units; Accord – 62 units; and CRV  - 148 units. 

Commenting on the robust sales in August 2013, Jnaneswar Sen, Sr VP - Sales and Marketing, HCIL said, “HCIL overall sales volume during August 2013 was quite robust. With the onset of festival season in West and South India, we have tried to maximize the production of Honda Amaze during August to be able to speed up the deliveries.” 

Despite significant contribution of its new offering ‘EcoSport’, Ford India could manage a paltry 2.1% growth in domestic sales from 7,840 units a year earlier to 8,008 units in August 2013. The company exported 3,057 vehicles in August this year, compared to 2,512 units in the same month last year, recording a growth of 21.7%. 

“We’re grateful and thankful to Indian customers for their response to the EcoSport. Despite the sustained difficult business environment, we have recorded our second highest monthly sales this year. True to our Global Brand Promise, we will continue to provide products with Quality, Green, Safe and Smart attributes that consumers want and value,” said Anurag Mehrotra, Vice President - Sales, Ford India. “We appreciate our customers' patience as we work hard to meet the ever-increasing demand for Ford cars, and we thank them for their continued trust and patronage.”

Ford inaugurated two dealerships – Solan and Kochi – in line with its aggressive expansion plans in India.These new outlets take Ford India’s footprint to 265 sales and service outlets in 142 cities across the country.

Other major players in mass passenger vehicle segment did not have much to celebrate.

Tata Motors witnessed its domestic sales of passenger vehicles plunge by 49.9% to 11,062 units in August 2013 from 22,062 units in August last year.

Another homegrown UV major, Mahindra & Mahindra, saw its domestic passenger vehicle sales decline by 27.5% to 15,821 units during the month.

General Motors India (GMI) reported an 11.1% decline in total sales at 6,673 units in August 2013, compared to 7,510 units in the same month last year.

"Our sales figures are not on the expected lines as we had stopped production and sales of diesel versions of Sail (both compact and sedan) and Tavera in the first week of June," P Balendran, Vice President, GM India said.

Toyota Kirloskar Motor (TKM) reported a 14.2% drop in August sales in the domestic market at 12,007 units, compared to 13,995 units in the same month last year.

"The market is still sluggish; however we hope to see the market improve with good monsoons and the upcoming festive season," TKM's Deputy Managing Director and Chief Operating Officer (Marketing and Commercial) Sandeep Singh said.

Renault India recorded a negative growth of 4.6% in its August sales, the company selling 3,733 units as opposed to 3,916 units a year ago. The company, in a statement, blamed high inflation, increasing interest rates, volatile fuel prices and depreciating value of rupee for the low sales.

While other segments struggled, two-wheelers managed to post a modest growth.

The two-wheeler market leader, Hero MotoCorp reported a 4.3% increase in its domestic sales at 450,146 units in August 2013 as against 431,739 units in August 2012. “The industry expects sales to pick up further on account of good monsoons and the festive season,” Anil Dua, Senior Vice President (Marketing and Sales), Hero MotoCorp, said.

Rival Bajaj Auto saw its bike sales plunge by 22.6% to 150,989 units as compared to 1,95,093 units August last year. 

Making rapid inroads into the Indian two-wheeler market after separation from Hero Group, Honda Motorcycle and Scooter India (HMSI) witnessed a 39.4% jump in its domestic sales to 291,639 units in August 2013 from 209,164 units a year earlier.

Chennai-based TVS Motor registered a 6.3% decrease in its domestic sales of two-wheelers from 135,493 units in August 2012 to 127,007 units in August this year.

While there are straws in the wind, which inspire hope and confidence, the uncertainty continues to beset the market. 

Good monsoon gives a glimmer of hope and is expected to lead to higher rural demand especially during the oncoming festival season. However, the economic environment being what it is, whether any pick-up in demand will be sustained remains a moot point




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